5.3 Examples

A highway agency needs to calculate asset value for pavements and bridges to support development of its TAMP. The agency is interested in exploring two different approaches to asset valuation, both of which utilize replacement cost for the calculation of initial value: a simplified approach in which only asset construction/reconstruction is considered in the calculation, and a more comprehensive approach that more accurately reflects the impacts of rehabilitation and preservation treatments on asset value.

The agency starts by reviewing different pavement and bridge treatments performed by the agency. This process is complicated by the fact that different terms are used for describing asset treatments in different systems. The agency reviews existing TAMPs to determine how different treatments have been represented by other agencies. Table 5-2 provides an example of the mapping of different treatments between pavements and bridges based on data presented in the Louisiana Department of Transportation Development (LADOTD) TAMP (34). The table shows, for pavements and bridges, the five work categories described by FHWA in its TAMP requirements, corresponding work types used when reporting data for federally-funded projects in the FHWA Financial Management Information System (FMIS), and the treatments actually considered by the agency’s asset managers. As shown in the table, for any one of the FHWA work categories there may be between zero and four corresponding different work types in FMIS. The work types in FMIS may map to a number of different specific treatments.

Table 5-2. Example Mapping of FHWA Work Categories, FMIS Work Types and Agency Treatments

All of the specific agency treatments listed in the table could conceivably be included in the asset valuation calculation. Adding treatments supports a more detailed and potentially more accurate calculation of how asset value varies over time, but entails quantifying more data.

Table 5-3 shows the results of the agency’s assessment, indicating which treatments the agency will include in the asset value calculation using each approach. For the comprehensive approach the agency elects to include a number of additional treatments, given these improve asset condition and result in shortening asset life if needed treatments are not performed.

Table 5-3. Treatments Included Using Simplified and Comprehensive Approaches

The agency described in Example 5-1 next quantifies the cost and effects of the different treatments. The agency uses treatment costs from its management system, together with a separate assessment of the cost of initial construction of a pavement or bridge performed as described in Chapter 4.

Treatment effects are established based on a combination of expert judgement and parameters from the agency’s management systems. Table 5-4 shows the resulting assumptions concerning treatment effects. For pavement, treatment effects are expressed in terms of a treatment’s impact on Pavement Condition Index (PCI). This is an agency-specific measure of pavement condition expressed on a scale from 0 to 100. Pavement treatments have the effect of resetting pavement age and returning PCI to 100, setting PCI to a specific value, or increasing PCI by a specified amount.

For bridges treatment effectives are expressed in terms of a treatment’s impact on the deck, superstructure, and/or substructure ratings defined in the NBI. These are expressed on a 0 to 9 scale, with 9 representing the best condition obtained for a new bridge. Bridge treatments have the effect of resetting age and returning all ratings to 9, or setting one or more ratings to a specific value.

Table 5-4. Example Treatment Effects

Based on the assessment of treatment effects, the agency establishes that with the more comprehensive approach it would be necessary to represent bridges at a component level, modeling the deck, superstructure and substructure of a bridge separately, given that several of the treatments have an impact on only one component.

The agency described in the previous example seeks to establish useful lives for bridges for the simplified and comprehensive cases outlined in the previous examples. The agency uses NCHRP Report 713 (18) for guidance. Following the approach described in this report, the agency first defines end-of-life criteria for its bridge components. The agency’s bridge managers recommend that when a deck, superstructure or substructure deteriorates to a rating of 5 on the 9-point NBI scale (classified as fair condition) the component has reached the end of its useful life, given the agency typically schedules rehabilitation work at this point to prevent the bridge from deteriorating into poor condition. Note that if the end of life was defined as the point when replacement of the bridge is required, then a lower rating value would be used as the definition for end-of-life. The agency uses the national defaults in Appendix B of Report 713 to estimate the time required for bridge components to deteriorate to a value of 5. These were developed using NBI data and implicitly include effects from routine maintenance. The national estimates in the report are:

• Deck – 42 years
• Superstructure – 48 years
• Substructure – 45 years

These values are used for the comprehensive case described in the above examples, in which bridges are represented at a component level, and rehabilitation treatments are included in the analysis.

For the simplified analysis the agency performs a separate analysis to determine a useful life for bridges assuming that maintenance, repair and rehabilitation work is performed consistent with the agency’s lifecycle policy. The agency reviews data on recent projects to establish a typical life, omitting projects where replacement was triggered by an external factor (e.g., the bridge crossed a roadway that was being widened to increase capacity). The agency compares this to the NCHRP Report 713 values for the time for component ratings to reach a value of 3, a point at which the agency would schedule replacement of a bridge. These are as follows:

• Deck – 79 years
• Superstructure – 83 years
• Substructure – 78 years

Based on review of agency data and other sources the agency establishes a useful life of 75 years for a bridge for the simplified case in which maintenance, repair and rehabilitation treatments are assumed to occur in a timely fashion over a bridge’s life.

A transit agency seeks to calculate residual value for its vehicles, facilities, track and equipment. Based on the guidance in Section 5-2, the agency calculates residual value for selected assets as shown in Table 5-5.

Table 5-5. Example Approaches for Calculating Residual Value for Transit Assets